• The Group said it will rely on Soya and maize imports in HY2023
  • Zimbabwe has been recording unreliable rainfall spells since 2016
  • The Group’s loss after tax widened from ZWL1 billion in 2021 to ZWL4 billion in 2022

Harare- As drought spells and erratic rainfall seasons continue to haunt Zimbabwe which heavily relies on natural rains for agriculture than irrigation systems, the Zimbabwe Stock Exchange (ZSE)-listed agro-concern, CFI Holdings says it will focus more on imports in the first half of the full-year to September 2023 to support operations. 

CFI Holdings Limited is a leading agricultural-based industrial holding company in Zimbabwe which is primarily involved in manufacturing and selling fresh produce, stock feed, and property management. Through subsidiaries and joint ventures, it manages wholesale and retail outlets which offer products and services for animal health, operates maize and wheat mills, and is involved in poultry farming and producing and selling poultry products.

In a statement accompanying the full-year financials for the year ended 30 September 2022, the Group’s chairperson Itai Pasi said, “The erratic rains received during the 2021/2022 agricultural season suppressed aggregate demand for agro-inputs and the country experienced a mid-season drought resulting in a significant decline in local agricultural output.”

“The Group is therefore expected to continue relying on imports of maize and soya for the next half-year of FY2023.”

Since the 2015-2016 rain season, Zimbabwe has been recording its worst rainfall spells. This has reduced farmer resilience and impacted their access to inputs and seeds.

Earth’s global average surface temperature in 2020 statistically tied with 2016 as the hottest year on record, continuing a long-term warming trend due to human activities.

With continued climate change risks looming due to geo-political tension in Eastern Europe between Russia and Ukraine, coal consumption has soared, increasing global warming, hence, drought spells are here to stay. 

Such scenarios mean companies need to anchor more of their production prospects on irrigation systems rather than natural rains to offset drought challenges. 

Due to erratic rainfall patterns in the 2021/2022 rainfall season, aggregate demand for retail products decreased for the first time since 2019 when the Zimbabwe dollar was re-introduced to contribute 80.0% from 2021’s 91.9% to Group turnover while farming operations accounted for 2.6% from 3.6% in 2021. 

Maize and soya beans output was 13% down from the previous season as a result of reduced planting following the late onset of rains but the potato harvest increased by 10%, whilst yields improved by 7% compared to the prior year. 

“The Estate invested in additional irrigation infrastructure to underpin horticultural production going into the future.”

However, milling operations at Victoria Foods contributed 17.4% to Group turnover up from 4.3% in 2021.

Underpinned by Victoria Foods’ continued recapitalisation, Group’s inflation-adjusted revenues for the year increased by 39.4%, from ZWL 35.39 billion in the previous year, to ZWL 49.37 billion.

The Group invested ZWL548.19 million from ZWL540.6 million last year in capital expenditure for the different Strategic Business Units (SBUs) mainly covering IT infrastructure for various Farm & City Centre and Agrifoods, poultry and irrigation infrastructure at Glenara Estates.

However, exchange losses which amounted to ZWL 6.1 billion on its foreign currency-denominated loans resulted in a loss before tax of ZWL2.59 billion against a loss of ZWL0.75 billion for the prior year and ultimately a loss of ZWL4 billion from a loss of ZWL1 billion last year. 

Going forward, Pasi said, “The Group will continue to invest in its milling operations in order to underpin its long-term competitiveness.”

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